Comments by the CEO

Record year for sales and profit

During the fourth quarter, net sales increased by 10.3 percent to SEK 71.9 (65.2) million and EBIT rose to 29.6 (28.0) percent, which is the Company’s best quarter ever. For full-year 2016, sales grew 6.8 percent amounting to SEK 242.4 (226.9) million. EBIT for the full-year amounted to SEK 58.5 (56.4) million, which corresponds to an EBIT margin of 24.1 (24.9) percent. Sales and profit for 2016 make this the best year in the Company’s history. Cash flow from operating activities remained strong and exceeded the year’s profit after tax.

During 2016, we introduced MSAB Ecosystem. This system addresses the needs of criminal investigative authorities for a broad solution that focuses on their overall system requirements. Development of the system is not yet finished and certain components will be launched in the current year. During the past year, we also implemented organisational changes to make our development and sales processes more efficient. That we have invested so heavily in our organisation and products while maintaining our EBIT margin and cash flow demonstrates the strength inherent in our business model.

The world is shrinking and information is reaching us faster and faster thanks to intelligent technology and new ways of communicating. At the same time, the world is becoming more and more technology-driven and hence it is also becoming increasingly complex. Our customers, especially the police, must be able to work effectively when investigating ─ and preferably preventing ─ crime. With the continuing rapid pace at which new phones and apps are being developed, the challenges our customers face remain great. Customers demand and need our innovative solutions to be more effective in their efforts to solve crime.

FBI Director James Comey has said, “The cell phone is probably the single most important piece of evidence you will find at a crime scene today.” Thanks to the development of the Internet of Things (IoT), the number of digital units which can be used to secure evidence, continues to rise. If we add to this the explosive growth in the number of apps being developed and new levels of encryption, we realise quickly what an enormous challenge our law enforcement agencies are facing.

It is this rapid development that prompts us to continue investing and developing powerful products that can unlock, read, secure and analyse content from all types of units. We need to offer powerful tools regardless of whether the device is a phone, USB memory or some type of wearable fitness armband, and regardless of the type of encryption protecting the data. In this way, our law enforcement agencies can become more effective in their efforts to make society a safer place for us all.

Everyone who works at or with MSAB should be proud over what we do. We are a world-leader within mobile forensics. Our leadership derives from us providing our customers with the best solutions to enable them to investigate and prevent crime every day. Being a leader in this industry also entails a great deal of responsibility at the strategic level ─ not just supplying customers with potent products but also protecting and safeguarding privacy. Our products are not intended for use in mass surveillance and are subject to certain export restrictions and international agreements. The company also has its own ethical guidelines.

In addition to selling products, we have also chosen to take an active role in gathering together law enforcement agencies, various legislators, and other technology companies to create a third way in the so-called “going dark” controversy. There are compelling arguments on both sides of the debate, on the one hand to protect personal integrity and on the other to provide law enforcement agencies with effective tools. We see it as a technical problem, where there is also a technical solution. We call our proposed solution FACT, or Forensic Access Controlled Technology. Several American magazines have written about this solution and it has even been referred to and discussed in congressional hearings, including with representatives from the FBI amongst others. Our solution is viewed as a real alternative in the search for a reasonable middle road.

In 2017, we will continue working with concerned stakeholders to push our proposal, which safeguards personal integrity as well as legal security.

MSAB does not offer any prognosis but we see a market which continues to grow, and our goal is to achieve profitable growth at a rate which is at least at the same pace as the market. We are expanding our workforce, launching new products with improved functionality, improving routines and processes and listening to our customers’ needs.

About MSAB

MSAB is a pioneer in forensic technology for mobile device examination.
With offices worldwide and our products in over 100 countries, we have a global reach.
The company has been involved with mobile communications since 1984 and has a singular focus on the forensic recovery of data from mobile devices.